How to Get a Student Loan Lowered

Making payments on student loans can be quite difficult, especially if you cannot find a job soon after graduation or you're in a low-paying job. Though your options are limited if you've borrowed private educational funds, federal student loan borrowers have several options to lower payments. To find out about available options, it's best to conduct your own research instead of depending on your student loan company or servicer to tell you about them.

Instructions

Federal Student Loans

1

Research the different repayment plans offered to federal student loan borrowers and weigh the advantages and disadvantages of each. Go to the Department of Education's Federal Student Aid website to read about repayment plans. Alternatively, visit the educational or FAQ section of your federal student loan servicer's website to see if it has any information on repayment plan options.

2

Select the graduated plan if you want low monthly payments only in the beginning or the income-sensitive plan if you'd like payments to be based on your income for a time. Both these plans keeps the standard 10-year repayment period, so your monthly payments may increase at an accelerated rate towards the end. While any federal student loan borrower can choose the graduated plan, you can only select the income-sensitive plan if your loan was made under the FFELP program.

3

Choose the extended plan if you want to lower your payments on a fixed or graduated schedule. The extended plan extends repayment to 25 years. Even though you'll pay more interest over time, your monthly payments will be lower.

4

Decide on either the income-based or income-contingent plan if you want your student loan payment to be based on your income. Both these plans allow you to extend repayment for up to 25 years and both offer automatic loan forgiveness for any balance leftover at the end of the repayment period. The IBR plan offers more generous terms by considering Federal Poverty Guidelines and your income size to determine your payment amount. While IBR is available to both FFEL and Federal Direct loan borrowers, the ICR limits itself only to Federal Direct borrowers.

5

Contact your federal student loan servicer to confirm your eligibility for the repayment plan you want. Complete the application and forms which the servicing company directs or sends you. Depending on the loan company, you may be able to complete and submit forms online.

6

Go to the Federal Direct Consolidation Loan website (See Resources) if you want to consolidate your student loans under the Federal Direct loan program. Consolidation allows you to make only one payment each month to the federal government instead of multiple payments to multiple student loan servicers. It also allows you to select a repayment plan, such as ICR, for which you may not have been eligible with your regular student loan servicer. Complete and submit the consolidation application online and mail any forms, promissory notes and income documentation required to complete the process.

Private Student Loans

7

Contact your private student loan holder. Ask the representative about any options for lowering the interest rate on the loan and lowering your monthly payment. Depending on your company, special terms or programs may be offered to student borrowers.

8

Consolidate your private student loans. Consolidation lets you stretch out the repayment terms. Combined with a lower interest rate you may receive -- especially if your credit has improved since you first obtained the loans --your monthly payment amount may be lower than what it was originally.

9

Apply for a home equity loan to pay off your student loans. Home equity loans typically offer better terms than what your student loan company may offer. In addition, the bank may also offer a lower interest rate since your loan is secured by equity in your home. With a home loan, you may also be able to lock-in a fixed interest rate instead of the variable rate most student loan companies offer.